ALEX BRUMMER: Lord Heseltine ready to back winners

Lord Heseltine is back and his push for a more challenging growth strategy is bound to be contentious.

The former President of the Board of Trade, who counts the rehabilitation of Liverpool and Canary Wharf among his past achievements, spells out in clear terms what he believes must be done if growth and enterprise in Britain are to be restored.

Heseltine firmly believes that a degree of government intervention is necessary and notes that faster growing economies than ours, including those of Germany and the United States, are not afraid to be more activist.

The US, home of red-in-tooth-and-claw capitalism, uses all manner of devices to support business from Pentagon and space agency contracts to a vibrant Small Business Administration.

In big picture terms Heseltine says there are certain things that the Government must not procrastinate about any longer. It must be prepared, as soon as the next election is out of the way, to make its decision on new runways for London’s airports. It needs a comprehensive energy strategy (the Hitachi investment is useful but one strand) and a more sensible stand on immigration.

If the Coalition was more activist in removing illegal immigrants then it could be more liberal in importing engineers and others with the skills business needs.

The idea of a National Growth Strategy, to be implemented by a National Growth Council made up by ministers and supported by business, seems eminently sensible. Critics, however, are bound to see it as turning the clock back to 1964 and the late George Brown’s ill-fated Department of Economic Affairs.

But Heseltine has a point. Up until now the Government’s growth agenda has been patchy and ill thought out, and austerity has been the primary goal. Every day, he argues, through regional funds, the taxpayer is investing in companies, so he is unashamedly in favour of backing winners.

His idea that the British Chambers of Commerce could be given a statutory role in local business support is intriguing but unlikely to find favour at the Treasury.

But he is right to point out that there is no group with more local knowledge about what is needed in terms of finance, infrastructure and the removal of onerous regulation, if power is to be passed back from Whitehall to localities and the regions.

Intriguingly, Heseltine also champions more intervention on overseas takeovers, something this paper has campaigned for extensively.

He suggests that foreign investors be required to make commitments to ‘developing UK research, skills and supply base and in exceptional cases discourage unwanted investments’. He notes the powers are there under the Enterprise Act 2002 and should be used.

Having watched the dismemberment of so many great British companies in the ‘nice decade’, 1997-2007 and beyond, I certainly could not disagree with that.

BP perks up

For the first time in recent memory BP is back on top of the list of risers on the London market with a 4.2 per cent rise in its shares having lifted its dividend.

Certainly Bob Dudley’s BP now looks ready to bounce back from the setbacks of its original failed effort to get into bed with Russian giant Rosneft and the Macondo oil spill. Following a spate of disposals that have raised £22billion of a £24billion target BP looks fitter for purpose.

It forecasts that the returns on its oil production by 2014 will be twice that of its 2011 portfolio, so that is something for shareholders (including this writer) to look forward too.

However, some caution is still called for. The expected 2012 settlement with the US authorities over the oil spill did not happen as a result of complex US-election-year politics. This may now not materialise until the spring of next year. And the scale of the bill is still uncertain with the Americans potentially levelling a fine of £13billion on top of the vast sums already paid out in the shape of clean-up costs and claims by individuals and businesses.

In terms of the billions of dollars that the US has forcibly extracted from investors the lift in the dividend looks a rather modest pay-out.

But there may well have been a case for postponing short-term gratification and hoarding cash until the exact damages demanded by Washington are known.

Egyptian downer

Moving in a very different direction are shares in Centamin, the Egypt-based gold miner.

Its stock plunged nearly 36 per cent after an Egyptian court annulled its mining licence.

The court decision looks set to be challenged by the company and the Egyptian Mineral Resources Authority but is bound to be seen as a test of support for how free enterprise will be treated by the Muslim Brotherhood government headed by Mohammed Morsi.

No one will want to see the rise of Argentine-style mineral nationalism.